Amazon Responding to Walmart’s Challenge in Online Retail
Walmart is posing a significant challenge to Amazon in ecommerce, but the giant is responding calmly.
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When you are trading stocks online or conventionally through the physical stock market, it is important to remember that competition is a very important factor in any major field of business. How a company and its stock perform on the field and in the stock market determines the worth and efficiency of the organization. A glowing example would be how Amazon ($AMZN) is reacting to the threat posed by Walmart ($WMT) in the online retail space. How Walmart Is Taking the Game to Amazon Walmart is eating into Amazon’s market share in online retail, if the latter’s reactionary measures are anything to go by. Amazon has begun dropping prices, and its once firm position at the head is now under threat. Walmart’s $3 billion acquisition of Jet.com has helped increase its e-commerce sales figures by 29%. US comparable sales rose by 1.8% due to improved traffic. Total Q4 revenue reached $130.9 billion. Respective Strengths of Walmart and Amazon Both Walmart and Amazon have their own set of advantages. Walmart is making massive gains in e-commerce but Amazon still has domination of this arena with $136 billion in terms of online sales as of 2016. However, $WMT earns higher all round retail revenue because of the large network of its physical retail locations. And that led to a whopping fiscal 2017 revenue of $485.9 billion, which is a nearly quadrupled figure of Amazon’s overall revenue. Amazon’s Reaction to Walmart’s Move To ensure it becomes a significant contender in the e-commerce field, Walmart recently launched free shipping on orders exceeding $35 for two days. Amazon responded by lowering the minimum purchase requirement for its free shipping from $49 to $35 for non-prime customers. Amazon didn’t announce these changes but quietly went about introducing them in the course of the President’s Day weekend. This particular move of Amazon in lowering its minimum purchase requirement is seen by analysts as a reactionary response to counter any advantage $WMT may have gained with its move. It indicates $AMZN is feeling threatened. Usually, the online retail giant is pretty vocal about the changes it makes, but this move was made inconspicuously. Amazon recently reported a 22% increase in its Q4 sales from the previous year’s Q4 to $43.7 billion. The company also intends to create over 100,000 new jobs in the course of the next 18 months. It’s therefore doing fine but just feeling the pinch as a result of
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Walmart’s moves. $AMZN is also 60% up from the past year and 14.1% up year-to-date. $WMT is up 10.9% from last year and 3.7% up year to date. Though Amazon is way up high in online retail, Walmart’s gradual progress is making it react and provide even better deals for its customers. Amazon probably has the experience and efficiency to deal with the challenge posed by Walmart. But it would be interesting to see how this battle shapes up.
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